ADNOC Group company issues a US$3bn bond

Monday, 06 November 2017 06:56

The pipeline is an important asset for the UAE’s oil industry. (Image source: ADNOC)The Abu Dhabi National Oil Company (ADNOC) has announced the issuance and closing of a US$3bn bond, one of the largest non-sovereign bond offerings in the Middle East, highlighting the proactive and flexible management of ADNOC’s portfolio of assets and capital structure

The bond, issued by Abu Dhabi Crude Oil Pipeline LLC (ADCOP), is an entity 100 per cent owned by the ADNOC Group.

ADCOP owns an approximately 406km pipeline that carries ADNOC Onshore’s crude oil from a collection centre in Abu Dhabi to the Fujairah oil export terminal, which provides access to international shipping routes.

The pipeline is a key asset for the UAE’s oil industry and allows for a significant proportion of the UAE’s total crude oil production to be transported from Abu Dhabi to the Arabian Sea.

Commenting on the transaction, Dr Sultan Ahmed Al Jaber, Minister of state in the UAE and CEO of ADNOC Group, said, “The very attractive pricing and substantial international demand for this offering positively reflects the UAE’s stable investment environment, as well as ADNOC’s new and progressive approach to its long-term financing strategy.”

“This bond represents an important, initial milestone in our efforts to fully optimise our capital structure in a smarter, efficient and flexible manner. Importantly, this transaction enables ADNOC, for the first time, to access the international debt capital market, thus opening an increased range of highly compelling and viable options for the long-term strategic financing of the ADNOC Group,” he added.

The pipeline has been operating since 2012. In 2016, it had an average throughput of approximately 615,000 bpd. The pipeline has been designed to transport around 1.5 mmbbl per day of crude oil, with the ability to increase its capacity to 1.8 mmbbl per day through the use of drag-reducing agents.

The bond offering consists of two senior secured bond tranches including an US$837mn, 12 year bullet bond tranche (Series A) and a US$2,200mn, 30 year fully amortizing bond tranche (Series B). The bond issuance was executed on favourable commercial terms with annual coupons of 3.65 per cent and 4.6 per cent for the Series A and B respectively.